Apple Faces Ericsson Lawsuit After Refusing Licensing Deal

Apple faces further legal action from Ericsson this week after refusing to accept a licensing deal for its patented LTE technologies, according to The Wall Street Journal. The Swedish networking company on Friday said it is suing Apple for infringing 41 wireless-related patents that it believes are critical to the functionality of products such as the iPhone and iPad.

“By refusing Ericsson’s fair and reasonable licensing offer for patented technology used in Apple smartphones and tablets, Apple harms the entire market and reduces the incentive to share innovation,” the company said in a statement.

Ericsson has filed two complaints with the U.S. International Trade Commission in an effort to secure an exclusion order against Apple, which could block the iPhone, iPad and other products involved from being sold in the United States. The company has also filed seven complaints with the U.S. District Court for the Eastern District of Texas as part of the negotiations. Apple's previous licensing deal with Ericsson expired in mid-January.

Apple originally filed suit against Ericsson on January 12, arguing that it was demanding excessive royalties for patents not essential to LTE standards. Ericsson countersued in a Texas courtroom just hours later, seeking an estimated $250 million to $750 million in royalties per year for Apple to continue licensing its patented wireless technologies. Ericsson is the world's largest provider of mobile network equipment and holds over 35,000 patents related to 2G, 3G and 4G wireless technologies.

Top Rated Comments

Calling Ericsson a "patent troll" is hilarious. This is the company that together with Nokia, Motorola etc. invented and built the entire mobile infrastructure that Apple, Samsung and everyone else on the market now relies on.

Ericsson licenced patented technology to Apple so Apple agreed to it in the past
Negotiations broke down over continued licencing
Licence expired
Apple continued to used the tech without permission
Ericsson offered to have a third party determine a fair compensation

Yet another sad case of Patent Trolls looking for Apple's money in Tyler, Texas. (I live in Dallas, it's nothing against Tyler. It's just the ambulance-chaser/troll mentality that kills me.)

The thing is, at $250 million a year, an individual Apple C-Level could pay it off and be done with it. I think we're looking more at a "principle of the matter" issue for Apple, and the whole thing is just a big tempest in a teapot.

Believing that this case has anything to do with patent trolls makes be believe that you shouldn't be commenting in this thread.

Yet another sad case of Patent Trolls looking for Apple's money in Tyler, Texas. (I live in Dallas, it's nothing against Tyler. It's just the ambulance-chaser/troll mentality that kills me.)

The thing is, at $250 million a year, an individual Apple C-Level could pay it off and be done with it. I think we're looking more at a "principle of the matter" issue for Apple, and the whole thing is just a big tempest in a teapot.

Ericsson is a real company with employees that provides real services and products. They do not meet the definition of a patent troll.

If Apple has infringed on their patents then they have to pay royalties. Just because Apple is a big company that makes your favorite hardware and/or you own stock in doesn't justify theft of innovation.

Okay, so here is a place where patent reform could be had, I think fairly easily.

Apple and Ericsson had a licensing agreement in place that expired. So they both acknowledged that there was a valid patent, and that it was reasonable to license said patent for usage in the devices.

Essentially, this is nothing more than a business negotiation that Ericsson has now taken to litigation. The result is that Apple is now forced to either roll the dice in a jurisdiction that is known to be unfriendly to defendants, or settle with essentially a gun to their head.

Why not create a mediation panel, tied to the USPTO that hears disputes such as this? Each side presents their case, and the panel determines questions of patent validity and value. If either of the parties is unhappy enough with their findings they can appeal the decision through the Federal appeals courts.

At least with this methodology these important decisions can be kept out of the hands of the kangaroo courts in the Eastern Division of Texas.

Yet another sad case of Patent Trolls looking for Apple's money in Tyler, Texas. (I live in Dallas, it's nothing against Tyler. It's just the ambulance-chaser/troll mentality that kills me.)

The thing is, at $250 million a year, an individual Apple C-Level could pay it off and be done with it. I think we're looking more at a "principle of the matter" issue for Apple, and the whole thing is just a big tempest in a teapot.

This makes no sense at all. This case has no resemblance to a patent troll case and I'm not sure why you think an individual C-Suite player at Apple could pay $250 million, and as you say, be done with it.

Okay, so here is a place where patent reform could be had, I think fairly easily.

Apple and Ericsson had a licensing agreement in place that expired. So they both acknowledged that there was a valid patent, and that it was reasonable to license said patent for usage in the devices.

Essentially, this is nothing more than a business negotiation that Ericsson has now taken to litigation. The result is that Apple is now forced to either roll the dice in a jurisdiction that is known to be unfriendly to defendants, or settle with essentially a gun to their head.

Why not create a mediation panel, tied to the USPTO that hears disputes such as this? Each side presents their case, and the panel determines questions of patent validity and value. If either of the parties is unhappy enough with their findings they can appeal the decision through the Federal appeals courts.

At least with this methodology these important decisions can be kept out of the hands of the kangaroo courts in the Eastern Division of Texas.

That is a damn reasonable way to handle these situations. Also I think it is exactly as you said, a break down in contract negotiations. There's no question of the validity of the patents in this case.

In all fairness according to the article Ericsson holds 35,000 patents. There's no company on the planet who have made 35,000 unique and incredible inventions that deserves to have a patent. This rather smacks of being a patent troll.

And now that Ericsson is all but forgotten as a cell phone manufacturer, they are using what little cash they have left to try and take a bite out of Apple.

How can it possibly be reasonable to pay Ericsson a fee for building a cell phone? What they going to do next, demand a royalty from BMW because people make cell phone calls in their cars?

Patent Trolls are holding companies with patents who make a business off of sueing infringes of them, and does not manufacture anything else or does any services.

Dude Seriously You Are Just Upset That It Is Your Favorite Company Getting Sued

They probably see it as the cost of doing business. Do you know how much money Walmart pays out in litigation every year? According to Forbes, even ten years ago, they faced 5,000 lawsuits a year. I suspect that number is even higher now.

Any time you're a big fish, people are going to come after you for money. Even if Apple acted to the highest ethical standards in every single situation, they will still have to deal with suits.

Were you this outraged when Apple tried to patent nearly the BASIC CONCEPT of a graphical-driven GUI and sued Microsoft? Or when they tried to pretty much patent THE BASIC CONCEPT of touch-screen driven mobile devices and sued Samsung? (It wasn't about Samsung's making devices that looked "too much" like an iPhone, because Apple continued the suit long after Samsung switched from iPhone copycats to phablets. Their goal was to use either lawsuits - or "licensing agreements" or "design changes" under the threat of lawsuits - to make it impossible for Android manufacturers to turn a profit. That was why they only sued Samsung and forced HTC into a licensing agreement instead of going after Google and Android itself.)

For goodness sakes, man, even this article on a pro-Apple site admits:

A) Ericsson patented and owns the technology in question and that the patents have value
B) Apple agreed to pay the patents in the past based on A)
C) Apple never contested A) but merely wanted to reduce the amount that they had to pay under the licensing terms. (The conjecture that Ericsson wanted to increase them is false. Ericsson would have been fine with Apple paying the same. Apple wanted to pay LESS.)
D) Ericsson offered arbitration. Apple refused. The licensing agreement expired. Apple refused to enter into a new one.
E) Ericsson sues Apple to force them into a new agreement.

Of course, Ericsson does not want to stop Apple from selling phones. Why? Because Apple's selling phones is the way that Ericsson makes money off Apple. But Ericsson will gain an injunction if Apple continues to infringe without paying. Now this is the difference between Apple and Samsung: Samsung claimed that they did not infringe at all (initially). They never had a licensing agreement with Apple. As Apple entered into a licensing agreement with Ericsson, they can't go that route, even as a delaying tactic. They admit to using Ericsson's technology but simply do not want to pay as much for it as they once did.

But it would be interesting to see their justification for their position. Why would the patent be worth less today than it was yesterday? Your argument: "cell phones are common and a part of life now like running water, electricity, broadband, gas" is backwards. The fact that cell phones are so vital to our daily lives - vital to the economy! - is precisely what makes the patents more valuable.

1. Modern society can't live without its cell phones

+

2. Cell phones can't exist without Ericsson's technology

=

Modern society can't live without Ericsson's technology!

And here is the deal. You think "cell phone" and immediately associate it with "iPhone" because Apple is currently the leading smartphone brand. So you are thinking that it is Apple's technology and design that gives Ericsson's patent its value in the first place. First off, even if that were true, that wasn't the position that Apple itself took when they sued Microsoft, as it was Microsoft who actually put Apple's UI design into the hands of more than like 5% to 10% of America's population. Second, it isn't true in the first place. Feature phones and even "dumb" cell phones were using Ericsson's technology long before the iPhone. And so were Blackberry, Symbian, Java Mobile, Windows CE, Palm etc. smartphones long before Apple entered the market. And Google's original prototype Android phone (based on the Blackberry) used it also. While obviously none of those companies were the 900 pound gorillas that Apple is now, they were making TONS of money back then so obviously the patents had value then.

And another angle: what was Apple before the iPhone? Didn't consider that did you? Without the mobile market that would not have existed without Ericsson's technology, Apple would still be puttering around with the iPod and not much else. No iPhone, no iPad. No smart devices cannibalizing the sales of Windows PCs and laptops and driving higher income people to abandon Windows altogether for Macs.

But Apple's claim that Ericsson's patent is somehow worth less today than it was yesterday is bizarre. Some - including Samsung - have claimed that patent values were worth more than their market value and either sued to break their patent agreements or were taken to court, but:

A) such patents weren't a major part of the product to begin with i.e. remove them from the product and it would still work and/or it could easily be replaced by a non-infringing component

B) something happened in the marketplace to reduce the value of the patent, i.e. the creation of a new, better technology

C) the company claims that the value of the patent was originally overstated

Apple isn't claiming any of this. They just decided that they were going to start paying less for something that they were paying yesterday.

Maybe it will work. Who knows. Maybe knocking Ericsson down a peg is some attempt to devalue the organization so they can acquire them (and lock the box on their patents, dealing a devastating blow to Samsung and other competitors in the process, similar to what Apple did when they bought the only company capable of making quality touch id hardware, forcing Samsung to be embarrassed for 2 years with their own clunky solution and keeping it from being in the Nexus 6 and therefore fully integrated into Google Wallet). Maybe Apple simply has money to burn and this is their way of spending it.

But honestly, if you are going to claim that Ericsson's actual hardware designs should not have patentable value, then I would REALLY like to know what you think of Apple suing Microsoft and Samsung over mere "look and feel" and/or "conceptual" matters that Microsoft and Samsung used their own technology (or code) to implement, and in many instances were rather different - and in some cases quite different - from the Apple IP that they were originally copying to begin with. Again, Ericsson's patents deal with actual hardware here. When Apple went after Samsung (as a proxy for Android) and Microsoft, they were trying to patent a particular method of computing or way that a device could be used. Granted, GUI based computing and touchscreen-based phones were probably more revolutionary - and more important in many ways - than Ericsson's hardware designs, but the latter is a lot easier to patent.

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